Reserve Bank of India Governor Raghuram Rajan kicked off the new financial year cutting the repo rate by 25 basis points. But the equity market, which was clamouring for a 50 basis point rate cut, expressed its disappointment with the monetary policy and the benchmark BSE Sensex tanked 516.06 points (2.03 per cent) to close at 24,883.59 over the previous close. In the first bi-monthly monetary policy for 2016-17, Rajan also announced a slew of liquidity enhancement measures, including a reduction of the minimum daily maintenance of cash reserve ratio (CRR) in the banking system. State Bank of India Managing Director Rajnish Kumar said the measures will help bring down the wholesale borrowing cost for the bank. Hence, there could be some scope for lending and deposit rate cuts. The repo rate, which is the interest rate at which banks borrow short-term money from RBI, has been pared to 6.50 per cent from 6.75 per cent. The cut was possible as retail inflation followed the RBI's projected trajectory and moved well within the target of 6 per cent set for January 2016. At a post-policy press meet, Rajan said: "The monetary policy stance remains accommodative. Going forward, we will be looking for further monetary room in signs of a good monsoon, further readings of low headline inflation, indications of a softening in core inflation and further evidence of a transmission of rate cuts." Excluding today's cut, the RBI has cut rates by 120 bps since January 2015, of which only about a half has been passed on by banks through lending rate cuts. "The effects of the liquidity measures will help the transmission. Banks have been continuously saying it's because of liquidity tightness that we can't transmit. Now we have given them enough liquidity. So, my hope is you will see significantly more transmission over the next few months," Rajan explained.